Chat with an FTB Representative

Changes to 2012 Forms

Updates to the Schedule K-1 (568) Instructions on 02/12/2013 –– Instructions for 568 Schedule K-1, Member's Share of Income, Deductions, Credits, etc.

We replaced text on Page 5, Column 2, Line 11b and Line 11c, bullet 9.

Previous Version

Any gain from the sale or exchange of qualified small business stock under IRC Section 1202.

Revised Version

Note: text deleted.

Reason for the changes

The Court of Appeal’s held in Cutler v. Franchise Tax Board (2012) 208 Cal. App. 4th 1247, that the qualified small business stock exclusion and deferral statutes under California Revenue and Taxation Code (R&TC) Sections 18152.5 and 18038.5 are unconstitutional. These sections are now invalid and unenforceable.

Taxpayers are required to report the gain from the sale of qualified small business stock (QSBS) as capital gain instead of as other income.


No tax impact.

Back to Tax Form Changes for 2012